##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended March 31, 2010
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1937
 For the transition period from  to
 Commission File No. 001-16101
 BANCORP RHODE ISLAND, INC.
  Rhode Island
    
    05-0509802(State or other jurisdiction of
    
    (IRS Employerincorporation or organization)
    
    Identification No.)
 ONE TURKS HEAD PLACE, PROVIDENCE, RI 02903
 (Registrants telephone number, including area code)
 (Former name, former address and former fiscal year, if changed since last report)
 þ o
 o o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o
 o þ
  Common Stock  Par Value $0.01
    
    4,670,582 shares(class)
    
    (outstanding)




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##### 



BANCORP RHODE ISLAND, INC.
Quarterly Report on Form 10-Q
Table of Contents
 Description
    
    Page NumberCover Page
    
    
    1Table of Contents
    
    
    2Part I  Financial InformationItem 1. Financial Statements (unaudited)Consolidated Balance Sheets
    
    
    3Consolidated Statements of Operations
    
    
    4Consolidated Statements of Changes in Shareholders Equity
    
    
    5Consolidated Statements of Cash Flows
    
    
    6Condensed Notes to Consolidated Financial Statements
    
    
    7-19Item 2. Managements Discussion and Analysis of Financial Condition
and Results of Operations
    
    
    20-37Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    38Item 4. Controls and Procedures
    
    
    39Part II  Other InformationItem 1. Legal Proceedings
    
    
    40Item 1A. Risk Factors
    
    
    40Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    40Item 3. Defaults Upon Senior Securities
    
    
    40Item 5. Other Information
    
    
    40Item 6. Exhibits
    
    
    41Signature Page
    
    
    42Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
  Special Note Regarding Forward Looking Statements
    2




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##### Table of Contents



BANCORP RHODE ISLAND, INC.
 
 Consolidated Balance Sheets (unaudited)
 March 31,
    
    
    December 31,2010
    
    
    2009(In thousands)ASSETS:Cash and due from banks
    
    $
    16,845
    
    
    $
    18,866Overnight investments
    
    
    600
    
    
    
    1,964Total cash and cash equivalents
    
    
    17,445
    
    
    
    20,830Available for sale securities (amortized cost of $361,410 and
$380,108, respectively)
    
    
    365,110
    
    
    
    381,839Stock in Federal Home Loan Bank of Boston
    
    
    16,274
    
    
    
    16,274Loans and leases receivable:Commercial loans and leases
    
    
    752,193
    
    
    
    732,397Residential mortgage loans
    
    
    170,200
    
    
    
    173,294Consumer and other loans
    
    
    201,445
    
    
    
    206,156Total loans and leases receivable
    
    
    1,123,838
    
    
    
    1,111,847Allowance for loan and lease losses
    
    
    (16,625
    )
    
    
    (16,536
    )Net loans and leases receivable
    
    
    1,107,213
    
    
    
    1,095,311Premises and equipment, net
    
    
    12,230
    
    
    
    12,378Goodwill, net
    
    
    12,262
    
    
    
    12,239Accrued interest receivable
    
    
    4,863
    
    
    
    4,964Investment in bank-owned life insurance
    
    
    30,325
    
    
    
    30,010Prepaid expenses and other assets
    
    
    21,056
    
    
    
    16,101Total assets
    
    $
    1,586,778
    
    
    $
    1,589,946LIABILITIES:Deposits:Demand deposit accounts
    
    $
    203,193
    
    
    $
    204,281NOW accounts
    
    
    68,724
    
    
    
    74,558Money market accounts
    
    
    78,824
    
    
    
    65,076Savings accounts
    
    
    378,228
    
    
    
    367,225Certificate of deposit accounts
    
    
    378,102
    
    
    
    387,144Total deposits
    
    
    1,107,071
    
    
    
    1,098,284Overnight and short-term borrowings
    
    
    37,851
    
    
    
    40,171Wholesale repurchase agreements
    
    
    20,000
    
    
    
    20,000Federal Home Loan Bank of Boston borrowings
    
    
    270,090
    
    
    
    277,183Subordinated deferrable interest debentures
    
    
    13,403
    
    
    
    13,403Other liabilities
    
    
    14,684
    
    
    
    20,244Total liabilities
    
    
    1,463,099
    
    
    
    1,469,285SHAREHOLDERS EQUITY:Common stock, par value $0.01 per share, authorized 11,000,000 shares: 
Issued: 5,007,190 and 4,969,444 shares, respectively
    
    
    50
    
    
    
    50Additional paid-in capital
    
    
    73,306
    
    
    
    72,783Treasury stock, at cost:373,850 and 364,750 shares, respectively
    
    
    (12,527
    )
    
    
    (12,309
    )Retained earnings
    
    
    60,445
    
    
    
    59,012Accumulated other comprehensive income, net
    
    
    2,405
    
    
    
    1,125Total shareholders equity
    
    
    123,679
    
    
    
    120,661Total liabilities and shareholders equity
    
    $
    1,586,778
    
    
    $
    1,589,946
 See accompanying notes to unaudited consolidated financial statements
  3




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BANCORP RHODE ISLAND, INC.
 
 Consolidated Statements of Operations (unaudited)
 Three Months EndedMarch 31,2010
    
    
    2009(In thousands, except per share data)Interest and dividend income:Overnight investments
    
    $
    5
    
    
    $
    9Mortgage-backed securities
    
    
    3,229
    
    
    
    3,403Investment securities
    
    
    550
    
    
    
    451Loans and leases
    
    
    14,568
    
    
    
    14,697Total interest and dividend income
    
    
    18,352
    
    
    
    18,560Interest expense:Deposits
    
    
    2,278
    
    
    
    4,494Overnight and short-term borrowings
    
    
    18
    
    
    
    27Wholesale repurchase agreements
    
    
    139
    
    
    
    133Federal Home Loan Bank of Boston borrowings
    
    
    2,665
    
    
    
    2,625Subordinated deferrable interest debentures
    
    
    164
    
    
    
    199Total interest expense
    
    
    5,264
    
    
    
    7,478Net interest income
    
    
    13,088
    
    
    
    11,082Provision for loan and lease losses
    
    
    1,600
    
    
    
    1,610Net interest income after provision for loan and lease losses
    
    
    11,488
    
    
    
    9,472Noninterest income:Total other-than-temporary impairment losses on
available for sale securities
    
    
    (1,592
    )
    
    
    Non-credit component of other-than-temporary losses
recognized in other comprehensive income
    
    
    1,021
    
    
    
    Credit component of other-than-temporary impairment
losses on available for sale securities
    
    
    (571
    )
    
    
    Service charges on deposit accounts
    
    
    1,264
    
    
    
    1,210Gain on sale of available for sale securities
    
    
    475
    
    
    
    61Income from bank-owned life insurance
    
    
    315
    
    
    
    289Commissions on nondeposit investment products
    
    
    237
    
    
    
    156Loan related fees
    
    
    189
    
    
    
    399Net gains on lease sales and commissions on loans
originated for others
    
    
    36
    
    
    
    29Other income
    
    
    370
    
    
    
    213Total noninterest income
    
    
    2,315
    
    
    
    2,357Noninterest expense:Salaries and employee benefits
    
    
    5,843
    
    
    
    5,153Occupancy
    
    
    861
    
    
    
    956Data processing
    
    
    654
    
    
    
    620Professional services
    
    
    632
    
    
    
    698FDIC insurance
    
    
    475
    
    
    
    387Loan workout and other real estate owned
    
    
    336
    
    
    
    128Marketing
    
    
    258
    
    
    
    315Equipment
    
    
    255
    
    
    
    241Loan servicing
    
    
    176
    
    
    
    159Other expenses
    
    
    998
    
    
    
    966Total noninterest expense
    
    
    10,488
    
    
    
    9,623Income before income taxes
    
    
    3,315
    
    
    
    2,206Income tax expense
    
    
    1,096
    
    
    
    743Net income
    
    
    2,219
    
    
    
    1,463Preferred stock dividends
    
    
    
    
    
    
    (375
    )Prepayment charges and accretion of preferred stock discount
    
    
    
    
    
    
    (61
    )Net income applicable to common shares
    
    $
    2,219
    
    
    $
    1,027Per share data:Basic earnings per common share
    
    $
    0.48
    
    
    $
    0.22Diluted earnings per common share
    
    $
    0.48
    
    
    $
    0.22Cash dividends declared per common share
    
    $
    0.17
    
    
    $
    0.17Weighted average common shares outstanding  basic
    
    
    4,622
    
    
    
    4,590Weighted average common shares outstanding  diluted
    
    
    4,650
    
    
    
    4,610
 See accompanying notes to unaudited consolidated financial statements
  4




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BANCORP RHODE ISLAND, INC.
 
 Consolidated Statements of Changes in Shareholders Equity (unaudited)
 AccumulatedOtherAdditional
    
    
    
    
    
    
    
    
    
    
    ComprehensivePreferred
    
    
    Common
    
    
    Paid-in
    
    
    Treasury
    
    
    Retained
    
    
    IncomeThree months ended March 31,
    
    Stock
    
    
    Stock
    
    
    Capital
    
    
    Stock
    
    
    Earnings
    
    
    (Loss)
    
    
    Total(In thousands, except per share data)2009Balance at December 31, 2008
    
    $
    28,595
    
    
    $
    49
    
    
    $
    73,323
    
    
    $
    (12,055
    )
    
    $
    58,763
    
    
    $
    415
    
    
    $
    149,090Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,463
    
    
    
    
    
    
    
    1,463Other comprehensive income:Unrealized holding gains on
securities available for sale,
net of taxes of $(370)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    688
    
    
    
    688Reclassification adjustment for
net gains included in net income, net of taxes of $21
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (40
    )
    
    
    (40
    )Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,111Exercise of stock options
    
    
    
    
    
    
    1
    
    
    
    412
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    413Macrolease acquisition
    
    
    
    
    
    
    
    
    
    
    78
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    78Share repurchases
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (254
    )
    
    
    
    
    
    
    
    
    
    
    (254
    )Share-based compensation
    
    
    
    
    
    
    
    
    
    
    77
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    77Tax benefit from exercise of stock options
    
    
    
    
    
    
    
    
    
    
    88
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    88Preferred stock discount accretion
    
    
    61
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (61
    )
    
    
    
    
    
    
    Dividends on preferred stock ($12.50
per preferred share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (375
    )
    
    
    
    
    
    
    (375
    )Dividends on common stock ($0.17
per common share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (781
    )
    
    
    
    
    
    
    (781
    )Balance at March 31, 2009
    
    $
    28,656
    
    
    $
    50
    
    
    $
    73,978
    
    
    $
    (12,309
    )
    
    $
    59,009
    
    
    $
    1,063
    
    
    $
    150,4472010Balance at December 31, 2009
    
    $
    
    
    
    $
    50
    
    
    $
    72,783
    
    
    $
    (12,309
    )
    
    $
    59,012
    
    
    $
    1,125
    
    
    $
    120,661Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,219
    
    
    
    
    
    
    
    2,219Other comprehensive income:Unrealized holding gains on
securities available for sale, net of taxes of $(1,213)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,252
    
    
    
    2,252Reclassification adjustment for
net gains included in net income, net of taxes of $166
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (309
    )
    
    
    (309
    )Non-credit portion OTTI, net of taxes of $358
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (663
    )
    
    
    (663
    )Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,499Exercise of stock options
    
    
    
    
    
    
    
    
    
    
    220
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    220Macrolease acquisition
    
    
    
    
    
    
    
    
    
    
    211
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    211Share repurchases
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (218
    )
    
    
    
    
    
    
    
    
    
    
    (218
    )Share-based compensation
    
    
    
    
    
    
    
    
    
    
    92
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    92Dividends on common stock ($0.17
per common share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (786
    )
    
    
    
    
    
    
    (786
    )Balance at March 31, 2010
    
    $
    
    
    
    $
    50
    
    
    $
    73,306
    
    
    $
    (12,527
    )
    
    $
    60,445
    
    
    $
    2,405
    
    
    $
    123,679
 See accompanying notes to unaudited consolidated financial statements
  5




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##### Table of Contents



BANCORP RHODE ISLAND, INC.
 
 Consolidated Statements of Cash Flows (unaudited)
 Three Months EndedMarch  31,2010
    
    
    2009(In thousands)Cash flows from operating activities:Net income
    
    $
    2,219
    
    
    $
    1,463Adjustments to reconcile net income to net cash (used in) provided by
operating activities:Depreciation, amortization and accretion, net
    
    
    (1,444
    )
    
    
    (1,367
    )Provision for loan and lease losses
    
    
    1,600
    
    
    
    1,610Income from bank-owned life insurance
    
    
    (315
    )
    
    
    (289
    )Share-based compensation expense
    
    
    92
    
    
    
    77Net gains on lease sales
    
    
    (17
    )
    
    
    (22
    )Gain on sale of available for sale securities
    
    
    (475
    )
    
    
    (61
    )Credit component of other-than-temporary impairment
losses on available for sale securities
    
    
    571
    
    
    
    Loss (gain) on sale of other real estate owned
    
    
    56
    
    
    
    (17
    )Proceeds from sales of leases
    
    
    907
    
    
    
    1,122Leases originated for sale
    
    
    (890
    )
    
    
    (944
    )Decrease in accrued interest receivable
    
    
    101
    
    
    
    406Decrease (increase) in prepaid expenses and other assets
    
    
    146
    
    
    
    (444
    )Decrease in other liabilities
    
    
    (5,372
    )
    
    
    (593
    )Net cash (used in) provided by operating activities
    
    
    (2,821
    )
    
    
    941Cash flows from investing activities:Available for sale securities:Purchases
    
    
    (31,313
    )
    
    
    (76,520
    )Maturities and principal repayments
    
    
    41,081
    
    
    
    50,411Proceeds from sales
    
    
    3,311
    
    
    
    1,880Net increase in loans and leases
    
    
    (12,368
    )
    
    
    (26,964
    )Capital expenditures for premises and equipment
    
    
    (210
    )
    
    
    (135
    )Proceeds from sale of other real estate owned
    
    
    345
    
    
    
    332Net cash provided by (used in) investing activities
    
    
    846
    
    
    
    (50,996
    )Cash flows from financing activities:Net increase in deposits
    
    
    8,787
    
    
    
    13,669Net decrease in overnight and short-term borrowings
    
    
    (2,320
    )
    
    
    (13,936
    )Proceeds from long-term borrowings
    
    
    33,700
    
    
    
    15,190Repayment of long-term borrowings
    
    
    (40,793
    )
    
    
    (752
    )Exercise of stock options
    
    
    220
    
    
    
    413Repurchase of common stock
    
    
    (218
    )
    
    
    (254
    )Tax benefit from exercise of stock options
    
    
    
    
    
    
    88Dividends on preferred stock
    
    
    
    
    
    
    (375
    )Dividends on common stock
    
    
    (786
    )
    
    
    (781
    )Net cash (used in) provided by financing activities
    
    
    (1,410
    )
    
    
    13,262Net decrease in cash and cash equivalents
    
    
    (3,385
    )
    
    
    (36,793
    )Cash and cash equivalents at beginning of period
    
    
    20,830
    
    
    
    55,457Cash and cash equivalents at end of period
    
    $
    17,445
    
    
    $
    18,664Supplementary Disclosures:Cash paid for interest
    
    $
    5,749
    
    
    $
    7,598Cash paid for income taxes
    
    
    43
    
    
    
    167Non-cash investing and financing transactions:Change in accumulated other comprehensive income, net of taxes
    
    
    1,943
    
    
    
    648Sale (purchase) of available for sale securities not yet settled
    
    
    5,467
    
    
    
    (5,000
    )Macrolease acquisition
    
    
    23
    
    
    
    78Transfer of loans to other real estate owned
    
    
    724
    
    
    
    Non-credit component of other-than-temporary impairment, net of taxes
    
    
    663
    
    
    
    155
 See accompanying notes to unaudited consolidated financial statements
  6




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##### Table of Contents



BANCORP RHODE ISLAND, INC.
 
 Notes to Consolidated Financial Statements (unaudited)
 (1) Basis of Presentation
       (2) Earnings Per Share
   7




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##### Table of Contents



(3) Recently Adopted Accounting Pronouncements
 Accounting for Transfers of Financial Assets, an amendment of FASB Statement No.
140,
 Amendments to FASB
Interpretation No. 46(R),
  (4) Available for Sale Securities
   8




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##### Table of Contents



Amortized
    
    
    Unrealized
    
    
    FairCost (1)
    
    
    Gains
    
    
    Losses
    
    
    Value(In thousands)At March 31, 2010:GSE obligations
    
    $
    83,348
    
    
    $
    326
    
    
    $
    (182
    )
    
    $
    83,492Trust preferred collateralized debt obligations
    
    
    1,979
    
    
    
    
    
    
    
    (1,446
    )
    
    
    533Collateralized mortgage obligations
    
    
    40,977
    
    
    
    692
    
    
    
    (2,116
    )
    
    
    39,553GSE mortgage-backed securities
    
    
    235,106
    
    
    
    6,766
    
    
    
    (340
    )
    
    
    241,532Total
    
    $
    361,410
    
    
    $
    7,784
    
    
    $
    (4,084
    )
    
    $
    365,110At December 31, 2009:GSE obligations
    
    $
    80,866
    
    
    $
    347
    
    
    $
    (287
    )
    
    $
    80,926Trust preferred collateralized debt obligations
    
    
    2,550
    
    
    
    
    
    
    
    (2,085
    )
    
    
    465Collateralized mortgage obligations
    
    
    45,641
    
    
    
    697
    
    
    
    (2,311
    )
    
    
    44,027GSE mortgage-backed securities
    
    
    251,051
    
    
    
    6,353
    
    
    
    (983
    )
    
    
    256,421Total
    
    $
    380,108
    
    
    $
    7,397
    
    
    $
    (5,666
    )
    
    $
    381,839
 (1)
    
    Amortized cost is net of write-downs as a result of other-than-temporary
impairment.  Less than One Year
    
    
    One Year or Longer
    
    
    TotalFair
    
    
    Unrealized
    
    
    Fair
    
    
    Unrealized
    
    
    Fair
    
    
    UnrealizedValue
    
    
    Losses
    
    
    Value
    
    
    Losses
    
    
    Value
    
    
    Losses(In thousands)At March 31, 2010:GSE obligations
    
    $
    32,178
    
    
    $
    (182
    )
    
    $
    
    
    
    $
    
    
    
    $
    32,178
    
    
    $
    (182
    )Trust preferred collateralized debt obligations
    
    
    
    
    
    
    
    
    
    
    533
    
    
    
    (1,446
    )
    
    
    533
    
    
    
    (1,446
    )Collateralized mortgage obligations
    
    
    1,349
    
    
    
    (26
    )
    
    
    11,397
    
    
    
    (2,090
    )
    
    
    12,746
    
    
    
    (2,116
    )GSE mortgage-backed securities
    
    
    43,484
    
    
    
    (340
    )
    
    
    
    
    
    
    
    
    
    
    43,484
    
    
    
    (340
    )Total
    
    $
    77,011
    
    
    $
    (548
    )
    
    $
    11,930
    
    
    $
    (3,536
    )
    
    $
    88,941
    
    
    $
    (4,084
    )At December 31, 2009:GSE obligations
    
    $
    37,081
    
    
    $
    (287
    )
    
    $
    
    
    
    $
    
    
    
    $
    37,081
    
    
    $
    (287
    )Trust preferred collateralized debt obligations
    
    
    
    
    
    
    
    
    
    
    465
    
    
    
    (2,085
    )
    
    
    465
    
    
    
    (2,085
    )Collateralized mortgage obligations
    
    
    5,520
    
    
    
    (182
    )
    
    
    12,088
    
    
    
    (2,129
    )
    
    
    17,608
    
    
    
    (2,311
    )GSE mortgage-backed securities
    
    
    69,310
    
    
    
    (982
    )
    
    
    140
    
    
    
    (1
    )
    
    
    69,450
    
    
    
    (983
    )Total
    
    $
    111,911
    
    
    $
    (1,451
    )
    
    $
    12,693
    
    
    $
    (4,215
    )
    
    $
    124,604
    
    
    $
    (5,666
    )
  9




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##### Table of Contents



After One, But
    
    
    After Five, ButWithin Five Years
    
    
    Within Ten Years
    
    
    After Ten YearsAmortized
    
    
    Fair
    
    
    Amortized
    
    
    Fair
    
    
    Amortized
    
    
    FairCost
    
    
    Value
    
    
    Cost
    
    
    Value
    
    
    Cost
    
    
    Value(In thousands)At March 31, 2010:GSE obligations
    
    $
    53,385
    
    
    $
    53,672
    
    
    $
    29,963
    
    
    $
    29,820
    
    
    $
    
    
    
    $
    Trust preferred collateralized debt obligations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,979
    
    
    
    533Collateralized mortgage obligations
    
    
    
    
    
    
    
    
    
    
    20,953
    
    
    
    21,296
    
    
    
    20,024
    
    
    
    18,257GSE mortgage-backed securities
    
    
    1,421
    
    
    
    1,475
    
    
    
    22,078
    
    
    
    23,259
    
    
    
    211,607
    
    
    
    216,798Total
    
    $
    54,806
    
    
    $
    55,147
    
    
    $
    72,994
    
    
    $
    74,375
    
    
    $
    233,610
    
    
    $
    235,588At December 31, 2009:GSE obligations
    
    $
    75,866
    
    
    $
    76,013
    
    
    $
    5,000
    
    
    $
    4,913
    
    
    $
    
    
    
    $
    Trust preferred collateralized debt obligations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,550
    
    
    
    465Collateralized mortgage obligations
    
    
    
    
    
    
    
    
    
    
    23,156
    
    
    
    22,957
    
    
    
    22,485
    
    
    
    21,070GSE mortgage-backed securities
    
    
    1,548
    
    
    
    1,604
    
    
    
    23,589
    
    
    
    24,624
    
    
    
    225,914
    
    
    
    230,193Total
    
    $
    77,414
    
    
    $
    77,617
    
    
    $
    51,745
    
    
    $
    52,494
    
    
    $
    250,949
    
    
    $
    251,728
      10




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##### Table of Contents



Credit Component of Other-Than-Temporary Impairment Losses For Whicha Portion Was Recognized in OtherComprehensive Income(In thousands)
    
    2010
    
    
    2009Balance, January 1
    
    $
    (384
    )
    
    $
    Credit losses for which an
other-than-temporary
impairment was previously
recognized
    
    
    (571
    )
    
    
    Balance, March 31
    
    $
    (955
    )
    
    $
    
   11




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##### Table of Contents



(5) Derivatives
   Asset Derivatives
    
    
    Liability DerivativesAs of
    
    
    As of
    
    
    
    
    
    
    As of
    
    
    As ofBalance
    
    
    March 31,
    
    
    December 31,
    
    
    Balance
    
    
    March 31,
    
    
    December 31,Sheet
    
    
    2010
    
    
    2009
    
    
    Sheet
    
    
    2010
    
    
    2009(In thousands)
    
    Location
    
    
    Fair Value
    
    
    Location
    
    
    Fair ValueDerivatives not
designated as hedging
instrumentsInterest rate products
    
    Other assets
    
    $
    464
    
    
    $
    391
    
    
    Other liabilities
    
    $
    467
    
    
    $
    426Total derivatives not
designated as hedging
instruments
    
    
    
    
    
    $
    464
    
    
    $
    391
    
    
    
    
    
    
    $
    467
    
    
    $
    426
    12




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##### Table of Contents



Amount of Gain Recognized in Income onLocation of Gain or (Loss)
    
    
    Derivative(1)Derivatives Not Designated as
    
    Recognized in Income on
    
    
    Three Months Ended March 31,Hedging Instruments
    
    Derivative
    
    
    2010
    
    
    2009(In thousands)Interest Rate Products
    
    Loan related fees
    
    $
    32
    
    
    $
    253Total
    
    
    
    
    
    $
    32
    
    
    $
    253
 (1)
    
    The amount of gain recognized in income represents net fee income and changes
related to the fair value of the interest rate products.     13




---



##### Table of Contents



(6) Fair Value of Financial Instruments
       14




---



##### Table of Contents



Fair Value Measurements at March 31, 2010 UsingQuoted Prices in
    
    
    Significant
    
    
    SignificantActive Markets
    
    
    Other
    
    
    Otherfor Identical
    
    
    Observable
    
    
    UnobservableAssets
    
    
    Inputs
    
    
    Inputs(In thousands)
    
    Total
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)GSE obligations
    
    $
    83,492
    
    
    $
    
    
    
    $
    83,492
    
    
    $
    Trust preferred CDOs
    
    
    533
    
    
    
    
    
    
    
    533
    
    
    
    Collateralized mortgage obligations
    
    
    39,553
    
    
    
    
    
    
    
    39,553
    
    
    
    GSE mortgage-backed securities
    
    
    241,532
    
    
    
    
    
    
    
    241,532
    
    
    
    Total available for sale securities
    
    
    365,110
    
    
    
    
    
    
    
    365,110
    
    
    
    Interest rate swap assets
    
    
    464
    
    
    
    
    
    
    
    464
    
    
    
    Interest rate swap liabilities
    
    
    467
    
    
    
    
    
    
    
    467
    
    
    
    
 Fair Value Measurements at December 31, 2009 UsingQuoted Prices in
    
    
    Significant
    
    
    SignificantActive Markets
    
    
    Other
    
    
    Otherfor Identical
    
    
    Observable
    
    
    UnobservableAssets
    
    
    Inputs
    
    
    Inputs(In thousands)
    
    Total
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)GSE obligations
    
    $
    80,926
    
    
    $
    
    
    
    $
    80,926
    
    
    $
    Trust preferred CDOs
    
    
    465
    
    
    
    
    
    
    
    465
    
    
    
    Collateralized mortgage obligations
    
    
    44,027
    
    
    
    
    
    
    
    44,027
    
    
    
    GSE mortgage-backed securities
    
    
    256,421
    
    
    
    
    
    
    
    256,421
    
    
    
    Total available for sale securities
    
    
    381,839
    
    
    
    
    
    
    
    381,839
    
    
    
    Interest rate swap assets
    
    
    391
    
    
    
    
    
    
    
    391
    
    
    
    Interest rate swap liabilities
    
    
    426
    
    
    
    
    
    
    
    426
    
    
    
    
   15




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##### Table of Contents



Note 5 
Derivatives.
  16




---



##### Table of Contents



Fair Value Measurements Using SignificantUnobservable Inputs(In thousands)
    
    2010
    
    
    2009Trust preferred collateralized debt obligationsBalance, January 1
    
    $
    
    
    
    $
    1,480Increase in unrealized holding losses
    
    
    
    
    
    
    (760
    )Other-than-temporary impairment
    
    
    
    
    
    
    Transfers to Level 2
    
    
    
    
    
    
    Transfers to Level 3
    
    
    
    
    
    
    Balance, March 31
    
    $
    
    
    
    $
    720
    Fair Value Measurements at March 31, 2010 UsingQuoted Prices in
    
    
    Significant
    
    
    SignificantActive Markets
    
    
    Other
    
    
    Otherfor Identical
    
    
    Observable
    
    
    UnobservableAssets
    
    
    Inputs
    
    
    Inputs(In thousands)
    
    Total
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Collateral-dependent loans and leases
    
    $
    2,586
    
    
    $
    
    
    
    $
    2,586
    
    
    $
    Other real estate owned
    
    
    724
    
    
    
    
    
    
    
    724
    
    
    
    
 Fair Value Measurements at March 31, 2009 UsingQuoted Prices in
    
    
    Significant
    
    
    SignificantActive Markets
    
    
    Other
    
    
    Otherfor Identical
    
    
    Observable
    
    
    UnobservableAssets
    
    
    Inputs
    
    
    Inputs(In thousands)
    
    Total
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Collateral-dependent loans and leases
    
    $
    3,441
    
    
    $
    
    
    
    $
    3,441
    
    
    $
    Other real estate owned
    
    
    155
    
    
    
    
    
    
    
    155
    
    
    
    
   17




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##### Table of Contents



Loans and leases receivable
 Stock in the Federal Home Loan Bank of Boston
 Deposits
 Wholesale repurchase agreements
 Federal Home Loan Bank of Boston borrowings
  18




---



##### Table of Contents



Subordinated deferrable interest debentures
 Financial instruments with off-balance sheet risk
  March 31, 2010
    
    
    December 31, 2009Book
    
    
    Estimated
    
    
    Book
    
    
    EstimatedValue
    
    
    Fair Value
    
    
    Value
    
    
    Fair Value(In thousands)Assets:Cash and due from banks
    
    $
    16,845
    
    
    $
    16,845
    
    
    $
    18,866
    
    
    $
    18,866Overnight investments
    
    
    600
    
    
    
    600
    
    
    
    1,964
    
    
    
    1,964Available for sale securities
    
    
    365,110
    
    
    
    365,110
    
    
    
    381,839
    
    
    
    381,839Stock in the FHLB
    
    
    16,274
    
    
    
    16,274
    
    
    
    16,274
    
    
    
    16,274Loans and leases receivable, net of
allowance for loan and lease losses:Commercial loans and leases
    
    
    738,973
    
    
    
    747,864
    
    
    
    718,943
    
    
    
    725,967Residential mortgage loans
    
    
    168,404
    
    
    
    172,152
    
    
    
    171,842
    
    
    
    175,816Consumer and other loans
    
    
    199,836
    
    
    
    195,324
    
    
    
    204,526
    
    
    
    197,137Interest rate swaps
    
    
    464
    
    
    
    464
    
    
    
    391
    
    
    
    391Accrued interest receivable
    
    
    4,863
    
    
    
    4,863
    
    
    
    4,964
    
    
    
    4,964Liabilities:Deposits:Demand deposit accounts
    
    $
    203,193
    
    
    $
    203,193
    
    
    $
    204,281
    
    
    $
    204,281NOW accounts
    
    
    68,724
    
    
    
    68,724
    
    
    
    74,558
    
    
    
    74,558Money market accounts
    
    
    78,824
    
    
    
    78,824
    
    
    
    65,076
    
    
    
    65,076Savings accounts
    
    
    378,228
    
    
    
    378,228
    
    
    
    367,225
    
    
    
    367,225Certificate of deposit accounts
    
    
    378,102
    
    
    
    380,692
    
    
    
    387,144
    
    
    
    390,210Overnight and short-term borrowings
    
    
    37,851
    
    
    
    37,851
    
    
    
    40,171
    
    
    
    40,171Wholesale repurchase agreements
    
    
    20,000
    
    
    
    20,357
    
    
    
    20,000
    
    
    
    20,432FHLB borrowings
    
    
    270,090
    
    
    
    293,556
    
    
    
    277,183
    
    
    
    301,210Subordinated deferrable interest
debentures
    
    
    13,403
    
    
    
    15,617
    
    
    
    13,403
    
    
    
    15,440Interest rate swaps
    
    
    467
    
    
    
    467
    
    
    
    426
    
    
    
    426Accrued interest payable
    
    
    1,637
    
    
    
    1,637
    
    
    
    2,122
    
    
    
    2,122
 (7) Contingent Liabilities
   19




---



##### Table of Contents



ITEM 2. Managements Discussion and Analysis
 General
 http://www.bankri.com SM
 Critical Accounting Policies
  Overview
  Rate/Volume Analysis Average Balances, Yields and Costs
 Interest Rate Risk
  20




---



##### Table of Contents



Financial Condition  Asset Quality
      21




---



##### Table of Contents



Financial Condition  Executive Summary
  March 31,
    
    
    December 31,
    
    
    September 30,
    
    
    June 30,
    
    
    March 31,(In thousands)
    
    2010
    
    
    2009
    
    
    2009
    
    
    2009
    
    
    2009Total assets
    
    $
    1,586,778
    
    
    $
    1,589,946
    
    
    $
    1,569,084
    
    
    $
    1,583,686
    
    
    $
    1,548,067Loans and leases receivable
    
    
    1,123,838
    
    
    
    1,111,847
    
    
    
    1,116,627
    
    
    
    1,117,655
    
    
    
    1,105,298Available for sale securities
    
    
    365,110
    
    
    
    381,839
    
    
    
    365,706
    
    
    
    376,026
    
    
    
    356,681Goodwill, net
    
    
    12,262
    
    
    
    12,239
    
    
    
    12,051
    
    
    
    12,051
    
    
    
    12,051Core deposits (1)
    
    
    728,969
    
    
    
    711,140
    
    
    
    685,104
    
    
    
    681,834
    
    
    
    636,240Certificates of deposit
    
    
    378,102
    
    
    
    387,144
    
    
    
    406,827
    
    
    
    402,839
    
    
    
    419,621Borrowings
    
    
    341,344
    
    
    
    350,757
    
    
    
    340,081
    
    
    
    336,244
    
    
    
    320,517Common shareholders equity
    
    
    123,679
    
    
    
    120,661
    
    
    
    121,961
    
    
    
    119,956
    
    
    
    120,379Book value per common share
    
    
    26.69
    
    
    
    26.16
    
    
    
    26.46
    
    
    
    26.07
    
    
    
    26.15Tangible book value per common share
    
    
    24.05
    
    
    
    23.50
    
    
    
    23.85
    
    
    
    23.45
    
    
    
    23.53Tangible common equity ratio (2) (3)
    
    
    7.08
    %
    
    
    6.87
    %
    
    
    7.06
    %
    
    
    6.86
    %
    
    
    7.05
    %Core deposits to total deposits(1) (3)
    
    
    65.8
    %
    
    
    64.8
    %
    
    
    62.7
    %
    
    
    62.9
    %
    
    
    60.3
    %
 (1)
    
    Core deposits consist of demand deposit, NOW, money market and savings accounts.(2)
    
    Calculated by dividing Common Shareholders Equity less Goodwill by Total Assets less Goodwill.(3)
    
    Non-GAAP performance measure.    22




---



##### Table of Contents



Financial Condition  Detailed Analysis
 Investments
        23




---



##### Table of Contents



Loans and Leases
  Commercial loans and leases 
       24




---



##### Table of Contents



Residential mortgage loans 
 Consumer loans 
  25




---



##### Table of Contents



March 31,
    
    
    December 31,2010
    
    
    2009(In thousands)Commercial loans and leases:Commercial real estate  owner occupied
    
    $
    167,603
    
    
    $
    167,853Commercial and industrial
    
    
    174,649
    
    
    
    178,808Commercial real estate  nonowner occupied
    
    
    187,988
    
    
    
    170,148Small business
    
    
    57,911
    
    
    
    56,148Multi-family
    
    
    66,716
    
    
    
    66,350Construction
    
    
    30,355
    
    
    
    23,405Leases and other (a)
    
    
    72,969
    
    
    
    75,057Subtotal
    
    
    758,191
    
    
    
    737,769Unearned lease income
    
    
    (7,039
    )
    
    
    (7,693
    )Net deferred loan origination costs
    
    
    1,041
    
    
    
    2,321Total commercial loans and leases
    
    
    752,193
    
    
    
    732,397Residential mortgage loans:One- to four-family adjustable rate
    
    
    114,499
    
    
    
    115,855One- to four-family fixed rate
    
    
    54,993
    
    
    
    56,724Subtotal
    
    
    169,492
    
    
    
    172,579Premium on loans acquired
    
    
    724
    
    
    
    738Net deferred loan origination fees
    
    
    (16
    )
    
    
    (23
    )Total residential mortgage loans
    
    
    170,200
    
    
    
    173,294Consumer loans:Home equity  term loans
    
    
    113,879
    
    
    
    119,909Home equity  lines of credit
    
    
    84,971
    
    
    
    83,771Unsecured and other
    
    
    1,564
    
    
    
    1,410Subtotal
    
    
    200,414
    
    
    
    205,090Net deferred loan origination costs
    
    
    1,031
    
    
    
    1,066Total consumer loans
    
    
    201,445
    
    
    
    206,156Total loans and leases receivable
    
    $
    1,123,838
    
    
    $
    1,111,847
 (a)
    
    There were no leases held for sale at March 31, 2010 or December 31, 2009. Deposits
  The following table sets forth certain information regarding deposits:
 March 31, 2010
    
    
    December 31, 2009Percent
    
    
    Weighted
    
    
    
    
    
    
    Percent
    
    
    Weightedof
    
    
    Average
    
    
    
    
    
    
    of
    
    
    AverageAmount
    
    
    Total
    
    
    Rate
    
    
    Amount
    
    
    Total
    
    
    Rate(In thousands)NOW accounts
    
    $
    68,724
    
    
    
    6.2
    %
    
    
    0.09
    %
    
    $
    74,558
    
    
    
    6.8
    %
    
    
    0.09
    %Money market accounts
    
    
    78,824
    
    
    
    7.1
    %
    
    
    0.79
    %
    
    
    65,076
    
    
    
    5.9
    %
    
    
    1.10
    %Savings accounts
    
    
    378,228
    
    
    
    34.2
    %
    
    
    0.55
    %
    
    
    367,225
    
    
    
    33.4
    %
    
    
    0.64
    %Certificate of deposit accounts
    
    
    378,102
    
    
    
    34.1
    %
    
    
    1.59
    %
    
    
    387,144
    
    
    
    35.3
    %
    
    
    1.80
    %Total interest bearing deposits
    
    
    903,878
    
    
    
    81.6
    %
    
    
    0.97
    %
    
    
    894,003
    
    
    
    81.4
    %
    
    
    1.13
    %Noninterest bearing accounts
    
    
    203,193
    
    
    
    18.4
    %
    
    
    0.00
    %
    
    
    204,281
    
    
    
    18.6
    %
    
    
    0.00
    %Total deposits
    
    $
    1,107,071
    
    
    
    100.0
    %
    
    
    0.79
    %
    
    $
    1,098,284
    
    
    
    100.0
    %
    
    
    0.92
    %
  26




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##### Table of Contents



Borrowings
   Asset Quality
  Nonperforming assets 
  March 31,
    
    
    December 31,2010
    
    
    2009(In thousands)Loans and leases accounted for on a nonaccrual basis
    
    $
    13,224
    
    
    $
    16,830Loans and leases past due 90 days or more, but still accruing
    
    
    
    
    
    
    826Restructured loans and leases on a nonaccrual basis
    
    
    1,145
    
    
    
    659Total nonperforming loans and leases
    
    
    14,369
    
    
    
    18,315Other real estate owned
    
    
    2,023
    
    
    
    1,700Total nonperforming assets
    
    $
    16,392
    
    
    $
    20,015Delinquent loans and leases 60-89 days past due
    
    $
    2,479
    
    
    $
    2,028Restructured loans and leases not included in nonperforming assets
    
    $
    441
    
    
    $
    445Nonperforming loans and leases as a percent of total loans and leases
    
    
    1.28
    %
    
    
    1.65
    %Nonperforming assets as a percent of total assets
    
    
    1.03
    %
    
    
    1.26
    %Delinquent loans and leases 60-89 days past due as a percent of
total loans and leases
    
    
    0.22
    %
    
    
    0.19
    %
  27




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##### Table of Contents



March 31,
    
    
    December 31,2010
    
    
    2009(Dollars in thousands)Nonperforming loans and leases:Commercial real estate
    
    $
    4,952
    
    
    $
    6,909Commercial and industrial
    
    
    1,544
    
    
    
    2,919Small business
    
    
    957
    
    
    
    1,147Multifamily
    
    
    
    
    
    
    205Construction
    
    
    710
    
    
    
    469Leases
    
    
    1,415
    
    
    
    1,878Residential
    
    
    4,349
    
    
    
    4,124Consumer
    
    
    442
    
    
    
    664Total nonperforming loans and leases
    
    $
    14,369
    
    
    $
    18,315
  Higher-Risk Loans 
 Adversely classified assets
   28




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##### Table of Contents



Allowance for Loan and Lease Losses
   Three Months
    
    
    Three MonthsEnded March 31,
    
    
    Ended March 31,2010
    
    
    2009(In thousands)Balance at beginning of period
    
    $
    16,536
    
    
    $
    14,664Loans and leases charged-off:Commercial real estate loans
    
    
    (627
    )
    
    
    Commercial and industrial loans
    
    
    
    
    
    
    (103
    )Small business loans
    
    
    (200
    )
    
    
    (447
    )Leases
    
    
    (336
    )
    
    
    (2
    )Residential mortgage loans
    
    
    (347
    )
    
    
    (309
    )Consumer and other loans
    
    
    (102
    )
    
    
    (12
    )Total loans charged-off
    
    
    (1,612
    )
    
    
    (873
    )Recoveries of loans and leases previously charged-off:Commercial real estate loans
    
    
    79
    
    
    
    Commercial and industrial loans
    
    
    11
    
    
    
    4Small business loans
    
    
    1
    
    
    
    5Leases
    
    
    6
    
    
    
    2Residential mortgage loans
    
    
    
    
    
    
    Consumer and other loans
    
    
    4
    
    
    
    11Total recoveries of loans previously charged-off
    
    
    101
    
    
    
    22Net charge-offs
    
    
    (1,511
    )
    
    
    (851
    )Provision for loan and lease losses charged against income
    
    
    1,600
    
    
    
    1,610Balance at end of period
    
    $
    16,625
    
    
    $
    15,423
  29




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##### Table of Contents



March 31,
    
    
    December 31,2010
    
    
    2009(In thousands)Loan categoryCommercial loans and leases
    
    $
    12,157
    
    
    $
    12,409Residential mortgage loans
    
    
    1,643
    
    
    
    1,340Consumer and other loans
    
    
    1,471
    
    
    
    1,504Unallocated
    
    
    1,354
    
    
    
    1,283Total
    
    $
    16,625
    
    
    $
    16,536
    30




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##### Table of Contents



Results of Operations  Executive Overview
  For the three-month periods endedMarch 31,
    
    
    December 31,
    
    
    September 30,
    
    
    June 30,
    
    
    March 31,(In thousands, except per share data)
    
    2010
    
    
    2009
    
    
    2009
    
    
    2009
    
    
    2009Income statement data:Net interest income
    
    $
    13,088
    
    
    $
    13,001
    
    
    $
    12,666
    
    
    $
    11,573
    
    
    $
    11,082Noninterest income
    
    
    2,315
    
    
    
    2,353
    
    
    
    2,241
    
    
    
    2,214
    
    
    
    2,357Noninterest expense
    
    
    10,488
    
    
    
    9,949
    
    
    
    9,812
    
    
    
    10,145
    
    
    
    9,623Net income
    
    
    2,219
    
    
    
    1,133
    
    
    
    2,203
    
    
    
    740
    
    
    
    1,463Net income applicable to common shares
    
    
    2,219
    
    
    
    1,133
    
    
    
    779
    
    
    
    303
    
    
    
    1,027Per share data:Diluted earnings per share
    
    $
    0.48
    
    
    $
    0.24
    
    
    $
    0.17
    
    
    $
    0.07
    
    
    $
    0.22Dividends per common share
    
    $
    0.17
    
    
    $
    0.17
    
    
    $
    0.17
    
    
    $
    0.17
    
    
    $
    0.17Operating ratios:Net interest margin (1) (5)
    
    
    3.52
    %
    
    
    3.42
    %
    
    
    3.38
    %
    
    
    3.10
    %
    
    
    3.08
    %Return on assets (2) (5)
    
    
    0.57
    %
    
    
    0.28
    %
    
    
    0.56
    %
    
    
    0.19
    %
    
    
    0.39
    %Return on equity (3) (5)
    
    
    7.32
    %
    
    
    3.67
    %
    
    
    2.56
    %
    
    
    1.00
    %
    
    
    3.48
    %Efficiency ratio (4) (5)
    
    
    68.09
    %
    
    
    64.80
    %
    
    
    65.82
    %
    
    
    73.58
    %
    
    
    71.60
    %
 (1)
    
    Calculated by dividing annualized net interest income by average interest-earning assets.(2)
    
    Calculated by dividing annualized net income by average total assets.(3)
    
    Calculated by dividing annualized net Income applicable to common shares by average common shareholders equity.(4)
    
    Calculated by dividing noninterest expense by net interest income plus noninterest income.(5)
    
    Non-GAAP performance measure.       31




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##### Table of Contents



Results of Operations  Comparison of the Three Months Ended March 31, 2010 and 2009
 Net Interest Income
   32




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##### Table of Contents



Average Balances, Yields and Costs
 For the three months ended March 31,2010
    
    
    2009Interest
    
    
    
    
    
    
    
    
    
    
    InterestAverage
    
    
    Earned/
    
    
    Average
    
    
    Average
    
    
    Earned/
    
    
    Average(In thousands)
    
    Balance
    
    
    Paid
    
    
    Yield
    
    
    Balance
    
    
    Paid
    
    
    YieldAssetsEarning assets:Overnight investments
    
    $
    2,292
    
    
    $
    5
    
    
    
    0.87
    %
    
    $
    820
    
    
    $
    9
    
    
    
    4.36
    %Available for sale securities
    
    
    372,516
    
    
    
    3,779
    
    
    
    4.06
    %
    
    
    342,587
    
    
    
    3,854
    
    
    
    4.50
    %Stock in the FHLB
    
    
    16,274
    
    
    
    
    
    
    
    0.00
    %
    
    
    15,671
    
    
    
    
    
    
    
    0.00
    %Loans and leases receivable:Commercial loans and leases
    
    
    730,907
    
    
    
    10,311
    
    
    
    5.71
    %
    
    
    672,873
    
    
    
    9,707
    
    
    
    5.83
    %Residential mortgage loans
    
    
    172,408
    
    
    
    2,029
    
    
    
    4.71
    %
    
    
    207,807
    
    
    
    2,660
    
    
    
    5.12
    %Consumer and other loans
    
    
    203,840
    
    
    
    2,228
    
    
    
    4.43
    %
    
    
    207,754
    
    
    
    2,330
    
    
    
    4.55
    %Total earning assets
    
    
    1,498,237
    
    
    
    18,352
    
    
    
    4.94
    %
    
    
    1,447,512
    
    
    
    18,560
    
    
    
    5.17
    %Cash and due from banks
    
    
    13,451
    
    
    
    
    
    
    
    
    
    
    
    28,329Allowance for loan and lease losses
    
    
    (17,225
    )
    
    
    
    
    
    
    
    
    
    
    (14,653
    )Premises and equipment
    
    
    12,359
    
    
    
    
    
    
    
    
    
    
    
    12,556Goodwill, net
    
    
    12,179
    
    
    
    
    
    
    
    
    
    
    
    12,064Accrued interest receivable
    
    
    4,372
    
    
    
    
    
    
    
    
    
    
    
    4,289Bank-owned life insurance
    
    
    30,118
    
    
    
    
    
    
    
    
    
    
    
    28,862Prepaid expenses and other assets
    
    
    18,579
    
    
    
    
    
    
    
    
    
    
    
    8,798Total assets
    
    $
    1,572,070
    
    
    
    
    
    
    
    
    
    
    $
    1,527,757Liabilities and Shareholders EquityInterest-bearing liabilities:Deposits:NOW accounts
    
    $
    68,669
    
    
    $
    15
    
    
    
    0.08
    %
    
    $
    61,249
    
    
    $
    18
    
    
    
    0.12
    %Money market accounts
    
    
    71,387
    
    
    
    149
    
    
    
    0.85
    %
    
    
    4,607
    
    
    
    1
    
    
    
    0.13
    %Savings accounts
    
    
    369,750
    
    
    
    531
    
    
    
    0.58
    %
    
    
    386,208
    
    
    
    1,083
    
    
    
    1.14
    %Certificate of deposit accounts
    
    
    385,599
    
    
    
    1,583
    
    
    
    1.67
    %
    
    
    418,627
    
    
    
    3,392
    
    
    
    3.29
    %Overnight and short-term borrowings
    
    
    39,161
    
    
    
    18
    
    
    
    0.19
    %
    
    
    52,245
    
    
    
    27
    
    
    
    0.20
    %Wholesale repurchase agreements
    
    
    18,222
    
    
    
    139
    
    
    
    3.06
    %
    
    
    10,000
    
    
    
    133
    
    
    
    5.39
    %FHLB borrowings
    
    
    271,742
    
    
    
    2,665
    
    
    
    3.92
    %
    
    
    247,674
    
    
    
    2,625
    
    
    
    4.30
    %Subordinated deferrable interest debentures
    
    
    13,403
    
    
    
    164
    
    
    
    4.90
    %
    
    
    13,403
    
    
    
    199
    
    
    
    6.00
    %Total interest-bearing liabilities
    
    
    1,237,933
    
    
    
    5,264
    
    
    
    1.72
    %
    
    
    1,194,013
    
    
    
    7,478
    
    
    
    2.54
    %Noninterest-bearing deposits
    
    
    199,735
    
    
    
    
    
    
    
    
    
    
    
    171,449Other liabilities
    
    
    11,427
    
    
    
    
    
    
    
    
    
    
    
    12,489Total liabilities
    
    
    1,449,095
    
    
    
    
    
    
    
    
    
    
    
    1,377,951Shareholders equity:
    
    
    122,975
    
    
    
    
    
    
    
    
    
    
    
    149,806Total liabilities and shareholders equity
    
    $
    1,572,070
    
    
    
    
    
    
    
    
    
    
    $
    1,527,757Net interest income
    
    
    
    
    
    $
    13,088
    
    
    
    
    
    
    
    
    
    
    $
    11,082Net interest rate spread
    
    
    
    
    
    
    
    
    
    
    3.22
    %
    
    
    
    
    
    
    
    
    
    
    2.63
    %Net interest rate margin
    
    
    
    
    
    
    
    
    
    
    3.52
    %
    
    
    
    
    
    
    
    
    
    
    3.08
    %
  33




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##### Table of Contents



Rate/Volume Analysis 
 Three Months Ended March 31,2010 vs. 2009Increase/(Decrease) Due to(In thousands)
    
    Rate
    
    
    Volume
    
    
    TotalInterest income:Overnight investments
    
    $
    (11
    )
    
    $
    7
    
    
    $
    (4
    )Available for sale securities
    
    
    (372
    )
    
    
    297
    
    
    
    (75
    )Commercial loans and leases
    
    
    (236
    )
    
    
    840
    
    
    
    604Residential mortgage loans
    
    
    (211
    )
    
    
    (420
    )
    
    
    (631
    )Consumer and other loans
    
    
    4
    
    
    
    (106
    )
    
    
    (102
    )Total interest income
    
    
    (826
    )
    
    
    618
    
    
    
    (208
    )Interest expense:NOW accounts
    
    
    (5
    )
    
    
    2
    
    
    
    (3
    )Money market accounts
    
    
    41
    
    
    
    107
    
    
    
    148Savings accounts
    
    
    (508
    )
    
    
    (44
    )
    
    
    (552
    )Certificate of deposit accounts
    
    
    (1,559
    )
    
    
    (250
    )
    
    
    (1,809
    )Overnight and short-term borrowings
    
    
    (2
    )
    
    
    (7
    )
    
    
    (9
    )Wholesales repurchase agreements
    
    
    (71
    )
    
    
    77
    
    
    
    6FHLB borrowings
    
    
    (226
    )
    
    
    266
    
    
    
    40Subordinated deferrable interest debentures
    
    
    (35
    )
    
    
    
    
    
    
    (35
    )Total interest expense
    
    
    (2,365
    )
    
    
    151
    
    
    
    (2,214
    )Net interest income
    
    $
    1,539
    
    
    $
    467
    
    
    $
    2,006
 Interest Income  Investments 
  Interest Income  Loans and Leases
   34




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##### Table of Contents



Interest Expense  Deposits and Borrowings 
     Provision for Loan and Lease Losses
  Allowance for Loan and Lease Losses.
 Noninterest Income
  Noninterest Expense
    35




---



##### Table of Contents



Income Tax Expense
   Liquidity and Capital Resources
 Liquidity
     36




---



##### Table of Contents



Capital Resources
      Minimum Required
    
    
    Minimum RequiredFor Capital
    
    
    To Be ConsideredActual
    
    
    Adequacy Purposes
    
    
    Well-CapitalizedAmount
    
    
    Ratio
    
    
    Amount
    
    
    Ratio
    
    
    Amount
    
    
    Ratio(Dollars in thousands)At March 31, 2010:Bancorp Rhode Island, Inc.Tier I capital (to average assets)
    
    $
    122,012
    
    
    
    7.80
    %
    
    $
    62,586
    
    
    
    4.00
    %
    
    $
    78,233
    
    
    
    5.00
    %Tier I capital (to risk weighted assets)
    
    
    122,012
    
    
    
    10.78
    %
    
    
    45,282
    
    
    
    4.00
    %
    
    
    67,923
    
    
    
    6.00
    %Total capital (to risk weighted assets)
    
    
    136,189
    
    
    
    12.03
    %
    
    
    90,563
    
    
    
    8.00
    %
    
    
    113,204
    
    
    
    10.00
    %Bank Rhode IslandTier I capital (to average assets)
    
    $
    120,197
    
    
    
    7.68
    %
    
    $
    62,569
    
    
    
    4.00
    %
    
    $
    78,211
    
    
    
    5.00
    %Tier I capital (to risk weighted assets)
    
    
    120,197
    
    
    
    10.62
    %
    
    
    45,253
    
    
    
    4.00
    %
    
    
    67,879
    
    
    
    6.00
    %Total capital (to risk weighted assets)
    
    
    134,374
    
    
    
    11.88
    %
    
    
    90,506
    
    
    
    8.00
    %
    
    
    113,132
    
    
    
    10.00
    %At December 31, 2009:Bancorp Rhode Island, Inc.Tier I capital (to average assets)
    
    $
    120,297
    
    
    
    7.65
    %
    
    $
    62,941
    
    
    
    4.00
    %
    
    $
    78,676
    
    
    
    5.00
    %Tier I capital (to risk weighted assets)
    
    
    120,297
    
    
    
    10.71
    %
    
    
    44,913
    
    
    
    4.00
    %
    
    
    67,369
    
    
    
    6.00
    %Total capital (to risk weighted assets)
    
    
    134,364
    
    
    
    11.97
    %
    
    
    89,825
    
    
    
    8.00
    %
    
    
    112,281
    
    
    
    10.00
    %Bank Rhode IslandTier I capital (to average assets)
    
    $
    118,412
    
    
    
    7.54
    %
    
    $
    62,855
    
    
    
    4.00
    %
    
    $
    78,569
    
    
    
    5.00
    %Tier I capital (to risk weighted assets)
    
    
    118,412
    
    
    
    10.55
    %
    
    
    44,882
    
    
    
    4.00
    %
    
    
    67,323
    
    
    
    6.00
    %Total capital (to risk weighted assets)
    
    
    132,479
    
    
    
    11.81
    %
    
    
    89,764
    
    
    
    8.00
    %
    
    
    112,205
    
    
    
    10.00
    %
 Recent Accounting Pronouncements
 Note 3  Recent Accounting Pronouncements
  37




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##### Table of Contents



ITEM 3. Quantitative and Qualitative Disclosures About Market Risk
 Interest Rate Risk
     Estimated Exposureto Net Interest IncomeDollar
    
    
    PercentChange
    
    
    Change(Dollars in thousands)Initial Twelve Month Period:Up 300 bps
    
    $
    (1,937
    )
    
    
    (3.7
    %)
  Asset and Liability
Management
  38




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##### Table of Contents



ITEM 4. Controls and Procedures
    39




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##### Table of Contents



PART II. Other Information
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
   Total Number
    
    
    Maximumof Shares
    
    
    number ofPurchased as
    
    
    shares that mayTotal number
    
    
    Average
    
    
    Part of
    
    
    yet beof shares
    
    
    Price Paid
    
    
    Announced
    
    
    purchasedPeriod
    
    purchased (a)
    
    
    Per Share
    
    
    Plan
    
    
    under the plan1/1/10 through 1/31/10
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2/1/10 through 2/28/10
    
    
    9,100
    
    
    $
    24.00
    
    
    
    
    
    
    
    3/1/10 through 3/31/10
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
 (a)
    
    In February 2010, the Companys Chief Executive Officer delivered 9,100 shares of the
Companys common stock to satisfy the exercise price for 22,000 stock options exercised.
The shares delivered were valued at $24.00 per share. The Chief Executive Officer paid the
balance of the exercise price and all taxes in cash. 
 Item 3. Defaults Upon Senior Securities
  
 Item 5. Other Information
   40




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##### Table of Contents



Item 6. Exhibits
 31.1
    
    
    Certification of Chief Executive Officer pursuant to Section 302
of the Sarbanes-Oxley Act of 200231.2
    
    
    Certification of Chief Financial Officer pursuant to Section 302
of the Sarbanes-Oxley Act of 200232.1
    
    
    Certification of Chief Executive Officer pursuant to 18 U.S.C.
Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
200232.2
    
    
    Certification of Chief Financial Officer pursuant to 18 U.S.C.
Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
 
  41




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##### Table of Contents



BANCORP RHODE ISLAND, INC.
 
   Bancorp Rhode Island, Inc.May 5, 2010
    /s/ Merrill W. Sherman(Date)
    Merrill W. ShermanPresident and
Chief Executive OfficerMay 5, 2010
    /s/ Linda H. Simmons(Date)
    Linda H. SimmonsChief Financial Officer
and Treasurer  42